What\u2019s the difference between a soft and hard credit inquiry?<\/h4>
A soft credit inquiry is typically used for pre-approvals and doesn\u2019t affect your credit score. It gives creditors a surface-level look at your credit, without digging in to your payment history or credit use.<\/p>
On the other hand, a hard credit inquiry is usually used with most loan and credit card applications. Each hard credit inquiry typically drops your score five or so points, though it can vary.<\/p><\/div><\/article>
How to prevent multiple car loan applications from hurting your credit<\/h3>
While a single hard pull will hurt your credit score<\/a>, you can minimize the damage to your score by submitting any other car loan applications within a short amount of time. Canadian credit bureaus don\u2019t penalize you for shopping around for the best rate since it proves you\u2019re trying to be a responsible borrower. So after the first pull, your credit score won\u2019t be continually hit if you allow multiple hard pulls for the same type of loan<\/em> within a certain time frame, usually 45 days. Basically, instead of listing each car loan application as a separate inquiry on your credit report, in that situation, credit bureaus will group all of the applications into one hard inquiry.<\/p> So if you plan on submitting multiple car loan applications, make sure to do submit them within 45 days of the first one in order to prevent your credit score from being hurt too much.<\/p> There\u2019s no one number that is \u201ctoo many,\u201d but generally, one credit inquiry every 3 to 6 months is not considered to be risky behavior by lenders and shouldn\u2019t affect your credit score too much. Multiple factors determine how many inquiries will affect your score, such as the length of your credit history and how many accounts you have. Keep in mind, hard credit inquiries remain on your credit report for 3 years, but typically only impact your score for about 12 months.<\/p> You can get credit reports directly from the 2 major credit bureaus: Equifax and TransUnion. It\u2019s possible to get your credit score for free. You can read our comprehensive guide to credit scores<\/a> to learn more.<\/p> If you don\u2019t get approved for a car loan, you might want to consider waiting a few months before applying with another lender. This will give you time to strengthen your application, whether that means improving your credit score<\/a>, coming up with a larger down payment or paying off some of your current debts.<\/p> If you\u2019re in a position where you need to make a car purchase quickly, consider calling the lender to explain your situation and finding out whether or not your recent rejections will be an issue. You can also consider using an online car loan broker,<\/a> which can help you find lenders you might qualify with by filling out one online form.<\/p> Now that you know how applying for a car loan will impact your credit score, it\u2019s time to find the right lender. You can browse through our list of reputable Canadian car loan providers below to help narrow down your options.<\/p>How many hard inquiries is too many?<\/h4>
How do I check my credit report and credit score?<\/h3>
What happens if I don\u2019t get approved for a car loan when I apply?<\/h3>
Compare car loans before applying<\/h3>